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Publication(World Bank, Washington, DC, 2020-05-04) World BankIraq, once again, is facing a combination of acute shocks which the country is ill-prepared tomanage. The collapse in oil prices has considerably reduced budgetary revenues and reversed the fiscal surpluses accumulated since 2018. COVID-19, and the lockdown measures needed to contain the pandemic have dealt a severe blow to economic activities especially the services sectors like transport, trade, banking and religious tourism, which constitute around half of the non-oil economy. The growing discontent over poor service delivery, rising corruption, and lack of jobs persists and is coupled with political impasse over the formation of a new government. Iraq's pre-existing conditions going into this crisis limit its ability to manage and mitigate the socio-economic impact. A large dependency on oil revenues coupled with built-up budget rigiditieslimit Iraq's fiscal space to respond to the COVID-19 outbreak and offer a stimulus package to re-start the economy. An undiversified economy, highly dependent on oil outcomes, as well as large presence of the state in economic and commercial activities, make it hard to create the needed private sector jobs for a predominantly young population. Furthermore, rampant corruption and weak governance and service delivery fueled large scale protests across the country calling for better public service delivery and jobs. As a result, all signs indicate that this multifaceted crisis will have a protracted impact. The outlook for Iraq, which was already negative prior to the COVID-19 shock, has markedly worsened since. Near-term economic growth will be subdued by low oil prices, a new OPEC agreement that has reduced oil production quotas, and unfavorable global and domestic conditions including disruptions from COVID-19 spread. As a result, the economy is projected to contract by 9.7 percent in 2020, down from a real GDP growth of 4.4 percent in 2019, with both oil and non-oil sectors contracting by 13 and 4.4 percent respectively. This special focus on digital economy (DE) highlights the importance of digital transformation for Iraq and the urgency behind it. Iraq's economic condition was gradually improving following the deep economic strains of the last three years. However, the recent protests and unrest highlight the continued fragility of the country and the high priority of improving economic opportunities, particularly for youth. Leveraging the DE will help Iraq address some of its citizens' concerns as well as accelerate the achievement of its development objectives.